I didn’t go to MIT, but even where I did my undergrad (UFL), a very large public research school, had plenty of opportunities. And I just don’t mean only academics. I minored in Portuguese, something that has been more useful to me sometimes than my actual major. I was able to participate in activities that wouldn’t have been present in a community college. I was in the honors program too, and was able to take classes which were more interesting than the non-honors options.
Yes. And yes. For-profit graduates average nearly double the debt load of public university graduates, and 50% more than private nonprofit grads.
And yes, marketing is a huge component of the budget of many for-profit institutions. If you look on page 8 of this PDF (a report from the Senate Committee on Education) you can see that Apollo - the owner of University of Phoenix, the largest for-profit college in America - spent just under 24% of its budget on marketing (much more if you don’t count profit as an expenditure).
Nearly 90% of its revenues came from federal student loans. So basically the government is giving Apollo/UofP money to pay for advertising to bring in more federal money. I wonder how much of that sort of thing affects the non-faculty employment statistics being discussed elsewhere in the thread; U of P is by far the largest educational institution in the country with more than 400,000 enrolled students.
In the UK student debt is a fairly recent phenomenon.
It dates from the 1990s when it was decided to massively expand higher education in order to train young people for work in a post-industrial economy. When I went to university only 10% of the school population went there destined for the most cerebral jobs and professions. The rest fitted into the metal bashing and manufacturing industrial employers. The strategic target was to get that figure up to 50% because it was reasoned that a modern economy needs website designers, media professionals and folk who send emails, have meetings with each other know a thing or two about spreadsheets and presentation software.
Obviously this did not come without a substantial increase in costs to the country. So it was no longer free and gradually the UK introduced fees and student loans. Being a handy sized nation, they set up a national student loans company and regulated the fees structure. This was easy because 99% of universities are publicly financed in the UK. The current fees are £9000 a year for the three year degree course (that includes top instiitutions like Oxford and Cambridge)…and of course students need something to live off, a maintenence loan. Student debt is now approaching £40,000 and expected to take 25 to 30 years to pay off. You don’t start paying untill you have a job paying £21,000 a year.
When watching US movies people in the UK were always rather puzzled by the long standing tradition of people ‘working their way through college’ waiting on tables. UK Students know all about that these days. But it is not the long, drawn out process it is in the US. It is normal to get a degree by 21, maybe do a Masters for one year and be out of education by the time you are 23.
However…encouraging universities to become degree factories that people imagine will lead to a well paid job is not proving to be plain sailing. From become institutions that were there to educate and pursue knowledge, some universities have gone for the big numbers and the quality of teaching has gone down. An academic career is not the convivial career path it once was. Now that they all pay, you are not allowed to fail students. So every child get a prize and there are lots more top class degrees grades being awarded. Cookie cutter degrees trump academic excellence in all but the top institutions. The universities are keen to attract lots of non-EU foreign students, where they can charge what they like.
Students graduating from this system emerge into a world of work are often rather disappointed to find that their degree is not the money spinning ticket to a good life that they imagined. Many go back to do another Masters. Maybe one that sounds like a credible job title that will make them more employable.
It is often the case that graduates find it difficult finding a decent job and end up back living with their parents, often unhappily. They have been dubbed ‘The boomerang kids’. You launch them out onto the world and they keep coming back when they can’t handle it. Being saddled with long term debt is seen as a serious liability. Especially since the UK is in the middle of housing crisis and the prospects for twenty somethings being able to afford a mortgage on a property as well as student loan repayments look slim.
In most of the other countries in Europe, education is state controlled and they are struggling with the same sort of issues. The UK is a bit more laisser-faire that the rest but I don’t think anyone sees the high levels of personal debt seen in the US as a good thing.
www.parliament.uk/briefing-papers/sn01079.pdf
Says here the UK has £10billion of student debt and that will rise to £100Billon.
They were promised an economy full of E-Jobs with impressive techno-savvy job titles. When they graduated they found mainly McJobs…would you like fries with that and Call Centre drudgery.
Each generation has its burden, I guess.
Beats $1.3 trillion, though in fairness we’ve been racking it up far longer.
As a Norwegian who at some exchange rates make more than that, I think I should point out that while the article is accurate, there are American assumptions underlying it which means that it does not illustrate how things actually work.
If you make 537 000 $ in Norway, pretty much no-one is going to get that in the form of wages. The majority of it will be in the form of stocks or other less taxed options. You will also be taking advantage of a number of deductibles.
Even statistics Norway note that the average tax is 25 %, and almost no-one pays more than 36 %.
For those who are interested in what they’d pay in taxes in Norway, you can find the tax mans english-language tax calculator here. Remember that income above 100 - 150k tends to shift away from a taxable wage though. Average income is about 80 000 $.
It would also be very different from how Norway has done it, and not recommended. The oil was never nationalized, and the revenue from oil does not turn into government revenue, but go into the sovereign wealth fund. Free university tuition, healthcare maternity and paternity leave etc is funded from the same sources as in every other country.
On the subject of universities in Norway:
Yes, tuition is practically nonexistent. There is a registry charge of about 100 $ each term as I remember. I might be out of date, its been many years.
However, in the US there is an understanding that a diploma is a middle class must-have as I understand it. The fact that universities in Norway are free does not mean that admission is not regulated in other ways. Very popular studies, such as medicine, engineering, law, finance etc only have a limited number of spaces. Admission is competitive, based on your grades.
Basically, admission is restricted based on your own drive and ability, not economics.
Norwegian students who don’t fail too much get a grant of 8-10 000 $ per year.
You can get a loan as well. The terms are quite generous, and every financial adviser I’ve ever heard has said “Leave that loan for last when paying down debts” The maximum lifetime loan is about 100 000$.
Also, as we are a small country, there are some quite generous additional grants in places for people who study at universities in foreign countries. This is also a bit of a second chance for people who don’t make the cut for the study they wanted.
What does the sovereign wealth fund pay for?
Nothing. Its just sits there and grows. Brooding. At the moment the stock part of the fund owns between 1-2 % of all publicly listed stocks in the world.
(In all honesty, profits from it, like stock dividends do go into the budget, but its a very small part of the total budget. )
You have got to admire Norway, they did the sensible thing with their Oil wealth, salting it away for the future. They stand a chance of the paying for the massive financial challenge developed nations face as the population grows older. There are so many examples of nations getting this sort of windfall and spending all the money on bright shiny things for their elite.
The last Norwegian I met in London was possibly the only person I have ever met who came to London and said he liked it because everything was so cheap.
I see where he is coming from…the drinks are on him next time, I think.
To encourage universities to compromise the academic standards of their degrees and turn themselves into peddlers of expensive job vouches to the aspiring middle classes does not seem to me to be very astute way of managing the intellectual capital of a country.
This seems to be the way the UK is heading, following the lead from the US.
Based upon the arguments of the OP:
Credit cards should be abolishedbecause they cause general inflation of consumer goods.
Mortgage loans should be abolished because they significantly increase housing prices.
Business acquisition financing (leveraged buyouts) should be abolished because they cause the costs of acquiring businesses to rise.
These are fundamental economic premises. Increase the access of credit results in increased demand, which fundamentally increases price.
If lenders/investors believe that college students are worthy of the credit risk, credit will be made available, just in the same way that credit is extended to consumers for credit cards, mortgage loans, and investors for business acquisitions.
The college education market is a business. Universities fight for enrollment of quality students especially those that can pay the tuition. They don’t care if the student is paying for their tuition from cash or loans. So increased demand for education is something that universities want.
The difference is that student loans are primarily government-financed. The private student loan market is a relatively small piece of the pie. The government is not in the business of issuing credit cards of financing leveraged buyouts, though it does back (rather than underwrite) some mortgages.
Education is a business.
Not exactly.
The selling of endorsements represented by degrees and diplomas by self serving institutions to job hunters prepared to pay a premium to get access to high paying jobs - that is a business.
Education is a different thing, rather more than a simple transaction, it informs you whole view of the world.
We spend a great deal of lives learning by various means, educational institutions play an important part, but largely confined to the first couple of decades.
Education is far too important to be reduced to the level of a money making business opportunity.
This is what is happening in the US and UK and people are starting to think that these institutions are perpetrating a confidence trick.
Other countries are taking quite a different approach to ensuring the youth of the country is equipped with the intellectual skills their economies will require in the future and financing it all through taxation. Far better to plan these things out in a strategic manner rather than let them be dictated by the arbitrary requirements of the current job market.
Saddling young people with a mountain of inescapable personal debt does not seem to be a sensible way to finance a comprehensive education system for a country.
University fees are an election issue at the moment in the UK, some parties have policies of reducing them. There is a good deal of cynicism about whether a university education is worthwhile.
I would be interested to know how bad it gets in the US.
I met one guy who claimed that some people incur huge debts for degrees that are unlikely lead to a job that will ever pay enough to meet the payments. $200,000 to become a teacher? A few misinformed choices early in your life and then a lifetime of being hounded for money you cannot possible earn?
Is this what happens?
And if banks handed out mortgages to 18 year olds with no income, job skills or prospects who wanted $60k to learn “Art”, they would be negligent in their duty to be responsible lenders. Banks, however, don’t do that, because they have a bottom line to account for. But the government has no such motivation, and therefore is free to waste taxpayer dollars and load teenagers with a lifetime of unrepayable debt in the process. And they specifically exempted student loans from bankruptcy. They didn’t do that for credit cards, mortgages or venture capital. You are comparing apples and oranges.
I’ve heard of debt that high for surgeons, lawyers and chiropractors. Not for teachers. Unless we’re talking PhD debt for wannabe college liberal arts professors.
But while I’ve heard that there are basically no humanities professor jobs left, and that therefore grad school in the humanities is a waste of money, at least in the “investment” sense, I’ve not heard of these degrees costing $200k. Yet.
So let’s say your claim is “close, but not quite true”.
Yeah, for some people that’s exactly what happens.
I am currently about $40,000 in debt. That got me a 2yr associates degree in IT, a post-graduate certificate in technical writing, a 3yr B.Sc in astronomy, and a languages certificate in french which I’m completing. I also have extra courses I’ve taken out of pure personal interest. After all of this, I’m working my ass off to get pre-reqs for a RN nursing program, because I am interested in medicine and medical school just isn’t realistic for me.
Between all of these I’ve worked at several jobs. Some PT, some FT - My longest was just over 2 years.
I am 34, and I was a high school dropout.
I wish I could tell people that employers respect and value an auto-didactic, and bigger and better opportunities have come from my wealth of knowledge and education. The reality however is that employers don’t care if you’re good at trivia, and while I was making a cool $41,200 at my last job, I would be lucky to find a job making that again.
So you’re saying that the federal government is guilty of predatory lending towards uneducated young people in our country? They are the “rent-to-own” lessors of education, preying on young people that don’t understand the economics of education, so you have people attending colleges out-of-state or private institutions to get an elementary education degree, and financing it with a $250,000 federally backed student loan?
What if that same person borrowed $10-15k total to attend a local community college to get their elementary education degree? Would that be a better use of the student loan money? I would think so. The problem is that student loan underwriters don’t ask what you are getting a degree in, and are you from out of state, they just want to know if you are enrolled and what is your or your parent’s financial situation.
Yes, basically. Except your numbers are highly inflated. I don’t think it costs anywhere near $250k for any degree at any institution in the country. And community college can cost much much less than $10k. I had a friend who put herself through community college while working minimum wage and it was a hundred bucks or so per class plus a few hundred more for books, four semesters if you’re full time. But that was a decade ago.
But the $30-60k it costs to get a bachelor’s degree at a mid-tier college might as well be a million dollars for a 21 year old theater graduate facing nothing but minimum wage jobs for the rest of their life. Worse if they loaded up on the “financial aid” to pay rent and buy groceries while earning their diploma, getting dangerously accustomed to luxuries like “a roof over their head” and “food”.
167,000 people owing more than $200,000?
No problem if they are all hot shot MBAs and Doctors who will pay that off in no time once they start their lucrative careers.
Can you accumulate that sort of debt if you are not be on track to become a highly paid professional? Do the they take into account the earning potential of graduates?
Teachers are eligible for income based repayment, and public service loan forgiveness after 10 years. Many states also offer tuition repayment (10k a year would be common) for teachers.
I’m surprised no one has yet to bring up Mike Rowe who has some thought provoking things to say on the subject.
“If we are lending money that ostensibly we don’t have to kids who have no hope of making it back in order to train them for jobs that clearly don’t exist, I might suggest that we’ve gone around the bend a little bit,”
Well, he seems a down to earth kind of a guy.
But he does not seem to see much further than pointing out the absurdities of the big shift from an education system that has been redirected to produce college graduates at huge expense.
Sure, it is true that anyone with traditional engineering and building skills that are in short supply is often in a much better position to earn a decent living that a graduate in debt with less than marketable degree. It is a consequence of supply and demand in the market for skills.
However that ignores the reasons why there has been this shift. The basis of the economy changed. Manufacturing employs far fewer people and often it is located overseas because of the huge advances in logistics. The shift in employment has been to service type businesses and for that you need reading, writing, speaking and communication skills.
The UK employs about 1.2million people to make and answer phone calls. Just as the container reduced the cost of shipping manufactured goods around the world, so too automation of the telecoms business has led to businesses like call centres becoming big employers. Call centre jobs employ a lot of these new graduates.
Governments are often judged on the success of the economy and the status of being ‘employed’ is a key to many peoples lives. Giving everyone a little job to do will get you elected whether no matter what it is.
Out of the big move to university education, it is hoped some will find there way toward working in key wealth creating industries and business of the future, the rest, probably the vast majority, will end up doing simple service jobs. They may look enviously at the trades who still have valued skills and feel that they have been victims of an elaborate confidence trick for which they have to pay dearly.
The government should pick up the tab for education, if they want a workforce tuned to their long term economic strategy…they do have one…don’t they?